Amir Kahanovitz, Chief Economist, Phoenix-Excellence
Yesterday’s trading volumes were below a third of their average level in the 30 trading days that preceded them (according to Bloomberg data) but this little did much, especially in the bond market. Yields in the middle of the curve, however, remained relatively low, although the 10-year yield stood out above its 50-day moving average. Weakness in government bonds intensified after Two weak issues of the US administration yesterday, for two years and seven years. The stock market also behaved strangely yesterday, with mega-technology stocks declining, compared with gains in most industries, the opposite of their relative behavior throughout 2021, and for no apparent reason, certainly not because of a run for safe assets. The common threat to both may be the inflation to which expectations have risen again, also following the price of oil:
The S & P500 is on track to end 2021 with a crazy 27% increase, But for the most part rests on optimism about the profitability of companies, According to analysts’ average forecasts, S & P500’s operating profit will jump 9% next year. But the growing question is how the companies will succeed in a scenario of a continued rise in input prices when, since mid-October, it seems that the question is no longer good for them. * Bloomberg economists have raised the possibility that since mid-October companies have been finding it increasingly difficult to pass on the rise in input prices to consumers, * which is reflected in the cessation of upward updates of their operating profit forecasts. The stock market has managed to rise since inflation expectations cooled (also thanks to omicron concerns), but as they rise again this risk may rise and hurt earnings forecasts.
The one who still continues to be hurt by inflation is US President Joe Biden, who is currently trying to prevent Russia from invading Ukraine. According to a new Gallup poll, Biden is experiencing a decline in support rates for him not only below those of Trump but also below those of his deputy, Kamla Harris.
China – CSI 300 stock index rising Against the background of expectations for further steps by the administration there to strengthen economic growth, as it expanded personal income tax easing and statements about easing policy against the backdrop of slowing growth signs.